Thread by @d0mPablo

The idea of a feedback loop is really important in the dynamics of any kind of complex system and, in particular, when we're thinking about fostering any kind of social change or social innovation. I want to dive deep on how I view the perpetual motion financial machine OLYMPUS.

The basic formula of a reinforcing feedback loop is that stimulus X produces reaction Y, which then produces more of stimulus X.

In a feedback loop every element is both 'cause' and 'effect'. For every variable you can trace links that represent influence on another element.

Reinforcing loops don't always mean growth. The same same reinforcing structure that produces growth can also produce collapse.
When a cycle of positive feedback continues for too long, investor enthusiasm can lead to irrational exuberance, which can create asset bubbles that pop

Growth usually can't continue forever, and I think it's fair to say $OHM has gone thru 2 mini BOOM/BUST cycles both reaching highs of $1400 and lows of $200.

So, how did $OHM pick itself back up after immense sell pressure and not spiral towards its risk free value or $1?

Where you find a reinforcing loop, there is typically a Balancing Feedback Loop to stabilize the system. The balancer may not be strong as the reinforcing or might not need to be fully activated, but you ALWAYS know there is a treasury full of assets to be distrubuted to stakers.

Olympus is trying to create a trustless world reserve currency. This is the holy grail of crypto. This is why I believe the diamond handed community members refused to sell depsite 80-90% market price drops.

While the treasury may needed to step in, #OHMIES didnt allow it to.

I created a flow chart that helps visualize the mechanics of $OHM at work. With the input from @wagmianon & @FluctusLux .

Note, some things may not be *entirely* true as there will be some assumed psychology involved on how we feel a rational actors would behave

I think it's important to note, $OHM trades like any other altcoin right now. So its natural when the price appreciates very quickly, short term players can be happy with a x2 then cashout, and cause a local top. New people who buy around there will have to wait and (3, 3).

But it's okay, as less stakers leave the system more yield is given to longterm players.

OHMDistributed = TotalSupply*rewardRate

rewardYield = OHMDistributed / OHMstaked

APY (1+rewardYield)^1095

less $OHM staked, more reward yield, causing a higher APY.

compounding 3x a day

I've seen a lot of skepticism and FUD lately,and honestly that is okay. It is okay to be skeptic when it comes to new economic experiments, as this protocol game theory people must coordinate and work together to succeed. The worst lowest % staked was 83%. (now 92%)

$OHM price is hard to understand as many people know theres an Intrinsic value / There is a future perceived value of OHMs you will have from staking apy, and just the genuine market speculation. The daily volatility can be expected to decrease as market cap and RFV increases

Also giving $sOHM utility is a great way to stop some sell pressure (kind of double edged sword with liquidation possibilities), but being able to borrow against our rebasing supply is key as you gain exposure to more $OHM or other assets if you dont want to sell your supply.

So where does all this #OHMIE confidence come from? Let's just say everyone is impressed with how high performing Olympus has been the past few months.

15million $ Made in July alone
Liquidity sitting around 50million. Olympus owns their own liquidity too, gets all trading fees.

Beyond helping with growth, bonding plays a key role in indefinitely securing the liquidity for OHM. This is done through LP bonds.

To increase the OHMDAI bond capacity, you decreases the Bond control variable.

Bond Price = 1+ debtRatio * BCV.

This is why Policy lowered LP BCV

I wouldn't be surprised to see 100m+ in liquidity sometime in October. The inflow and outflow of $OHM is very respectable. The growth rate of Olympus is huge. This protocol cannot be ignored any longer. There are many interesting things to view on the Dashboard, I suggest looking

The whole "if everyone unstakes and sells at same time number go down" yes. Obviously. Do this with any stock or crypto asset they will all suffer the same fate. Reason longterm players dont unstake as the cashflow and metrics of Olympus is no secret. The future looks promising.

The Protocol Owned Liquidity (POL) will be a huge factor in the success of Olympus. Not having to rely on 3rd party providers to provide Liquidity is very important. Holders of $OHM currency are the ones who determine monetary policy, not some weak secondary governance token.

Today $ETH bonds launch, adding a new asset in the treasury. Now have $DAI $FRAX $ETH. I wouldn't be surprised in the future seeing $RAI $UST or $FEI backing each $OHM. Treausry diversification will be critical to $OHM s growth as it attempts to be the true decentralized currency

No we're not the 'NeXt iRoN FiNanCe' suggest you look into what actually caused it to spiral and lose its peg (ohm doesnt even have a peg lmfao)

Pretty sure the bank run started with some whales removing their liquidity, something Olympus doesn't have to worry bout 🤝

$OHM

In short, dollar pegged stables will always play a role in the entire crypto ecosystem. Having a new attempt at a reserve currency thats backed by various amounts of dollar pegged stables is an experiment worth investing in IMO, as the demand for stable non fiat currency is HIGH.

There is many self healing natures that Olympus has to keep the premium high on $OHM. This flywheel effect is very interesting to see playout, and to you FUDsters trying to find a point in the loop that breaks and everything falls apart, you may never find it. 😉